How to make money on real estate in Ukraine: ways to generate income

in 2023 about a year 50% apartments, acquired in new buildings - used to generate income, not the residence of the original investor. A similar situation occurs in the commercial real estate market.. Alexandr Tsvigun, expert on real estate in Odessa with more than 25 years of experience will share information, how to make money on real estate in Ukraine.

There is 2 main ways of making money on real estate:

• buying a home at the construction stage for subsequent resale;
• buying a home for a monthly rental income.

The first one assumes a one-time profit, due to the growth in the value of the purchased property. Price may rise, due to various factors - from the development of infrastructure around, ending with a general rise in property prices.

The second is long-term profit and guaranteed payback, the question is only in time. Once the tenants have lived enough time in the apartment, the rent will fully cover the purchase costs and will be profitable all the time.

Who invests in Ukrainian real estate?

Private investors - given circle of persons, usually, buys the most profitable one-room apartments. The demand for them never falls, especially for rent. Housing is selected in a place with developed infrastructure, public transport stops and metro stations. Much less investment is required, than portfolio investors, but at the same time the total income falls commensurately.

Portfolio investors - usually a large number of apartments are purchased. Starting from 2-3 apartments, ending in dozens - the whole floor can also be bought. Wherein, the developer can make a discount in the amount 20-30%, what makes such an investment the most profitable. Income is obtained by the same methods, as for private investors (sale or rent).

Read also: Investments in real estate in Ukraine: basic rules for an investor

How to get income from residential real estate in Ukraine?

Resale

Often income is generated through resale. Most of the investors prefer to sell the apartment in the future through an assignment agreement, with the help of the developer. Thanks to this, they avoid transaction costs in the form of advertising., realtor, notary, and others. Wherein, the assignment agreement allows you not to pay taxes. Portfolio investors can get approximately 50% from your investment, which allows you to get huge profits, because the investment is big. Private investors receive up to about 30% net profit, what is acceptable for home purchase in small quantities.

Rental

Usually, if the property was not sold before the house was put into operation, she is rented. Owning a home without any profit is unprofitable, due to the need to pay taxes, utility bills and other expenses. Such an investment begins to lose its benefits..

The landlord makes repairs before renting out the apartment, adds decoration and in some cases furniture. All these factors significantly affect the cost of renting out real estate.. If the apartment has a good appearance, all the necessary household appliances for living, then, if there is demand, the payback period varies within 10-15 years old. Inflation in this case does not particularly affect profitability and the landlord receives stable money for a long time. Practice is common, when the landlord lives off the rented apartments.

Benefits of buying a home in a new building for earnings

It is worth remembering about the discount, which portfolio investors can count on from a developer. The benefit is, what he gets into circulation of funds, which may be lacking. Thereby, unnecessary loans and interest are avoided, which need to be overpaid for them. Consider the advantages and disadvantages of investing in real estate under construction.

Advantages:

• The ability to quickly resell. An investor can make a quick profit, buying an apartment at one stage, and selling on another. At the same time, he will not have to pay various costs., in the form of taxes, utility bills and other expenses.
• Low entry threshold. If the investor is not a portfolio investor, then he needs a small amount, for which he can buy at least one apartment. Consequently, investors are not required to have huge amounts of money..
• Payback time. So, how real estate is bought significantly cheaper, then payback takes a small amount of time. On average, this process takes 3 y. Which, by the standards of long-term investment, is quite small.

Flaws:

• Possible construction freeze. The situation is possible, in which the developer will not have the funds to continue construction and the construction will stand for an indefinite amount of time. It is also possible for other factors.. The essence is the same, investments will start to burn and people who wanted a quick resale will have to wait for a while.
• Fraud by the developer. Quite a frequent case in practice, when a developer collects investors' money and disappears, construction in such a situation also stops. In this case, investors face an almost complete loss of funds..
• Unfavorable location of the construction site in terms of infrastructure. In this case, apartments may not have sufficient demand for a long time., and the process of generating income can be delayed.

Earnings on commercial real estate in Ukraine

This type of real estate is interesting for businessmen, who purchase it for the development and expansion of their own enterprises. But, commercial real estate is no less interesting for investors - for renting out to other businessmen. This option is considered a long-term investment with high returns in the long term.. For such premises, a large number of special permits are required - the building must meet all safety requirements.

If the investor is going to use an apartment as a commercial real estate, then it is necessary to transfer the apartment to a non-residential fund. Additional requirements are also put forward for such apartments., one of which is located on the ground floor of the house.

However, in some cases, to earn money on commercial real estate, investors are engaged in the resale of commercial real estate, our editorial staff has prepared a separate material for them.

Related article: How to sell commercial real estate in Ukraine - advice from a real estate expert

What's better: lease or resell?

It's simple - if the investor wishes stable income for many years, then he needs to rent. At some point, the rent will pay off the cost of the apartment, and he can sell it, or get a net profit. If the investor wishes to receive quick profit, it is worth doing a resale. Anyway, it is worth contacting the experts, which will help to check all documents and accompany the transaction at every stage, to reduce risks.